According to the Pennsylvania Supreme Court, the state's common law and statutory arbitration rules, which impose a thirty day time limit on challenging an award, are not preempted in state court by the Federal Arbitration Act's three month challenge period, because enforcing a shorter time limit does not undermine the federal policy favoring arbitration.

In Moscatiello v. Hilliard, No. 6 WAP 2007, 2007 WL 4553342 (Pa. Dec. 27, 2007), Moscatiello and Hilliard submitted an investment dispute to arbitration. The arbitration panel issued an award in Hilliard's favor, and two and a half months later, Moscatiello filed a petition to vacate the award.

The trial court dismissed the petition as untimely under Pennsylvania law, which sets a thirty day time limit for challenging arbitration awards. In reaching this decision, the trial court found that the three month time limit set forth in the Federal Arbitration Act (FAA) does not preempt Pennsylvania's thirty day timeline.

On appeal to the Pennsylvania Supreme Court, the issue was whether the FAA preempts Pennsylvania law with respect to the timeline for challenging an arbitration award. In analyzing this issue, the Court observed that the federal policy favoring arbitration, as embodied by the FAA, does not dictate any particular procedures but merely requires the enforcement of arbitration agreements.

Therefore, the precise question before the Court was whether Pennsylvania's abbreviated timeline for challenging awards interferes with the FAA's purpose of enforcing arbitration agreements according to their terms. The Court found no interference and thus held that the abbreviated timeline was not preempted by the FAA.

Having found no preemption, the Court turned to question of whether to apply the FAA timeline or the Pennsylvania timeline. Since the parties' arbitration agreement did not invoke a particular arbitration statute, the Court held that the Pennsylvania timeline should apply. Accordingly, the petition for vacatur was properly deemed untimely.

In reaching its decision, the Court noted that the abbreviated timeline actually promotes the finality of arbitration awards. The Pennsylvania Superior Court has made a similar observation, stating that the abbreviated timeline "does not conflict with the FAA's purpose of encouraging arbitration of matters to expedite litigation" but rather "reinforces that goal by more quickly rendering arbitration awards final." Joseph v. Advest, Inc. , 906 A.2d 1205, 1211 (Pa. Super. Ct. 2006).

That line of reasoning raises an interesting question: Would the FAA preempt an enlarged timeline for challenging arbitration awards since an enlarged timeline undercuts the finality of arbitration and thereby undermines the use of arbitration as an expeditious means of dispute resolution?